Ex Walmart CEO issues shopper warning over ‘bubble’ impacting customers – and price is no longer biggest issue
THE ex-CEO of Walmart US has warned that the chain could find it tricky to keep high-income shoppers that have turned to the company.
Bill Simon alluded to a bubble that has been created in recent years.
Bill Simon, the former CEO of Walmart US, warned of the difficulties the company could faceCNBC
GettyWalmart has proved popular among low-income and high-income Americans[/caption]
Shoppers turned to budget-friendly options as inflation squeezed family incomes.
In June 2022, inflation hit a whopping 9.1% – a figure not seen since the summer of 1981.
Inflation is trending downward and Simon, the former CEO of Walmart US, alluded to the potential impacts this could have on the chain.
“As long as there’s inflation and those tailwinds that come from particularly from food inflation, more traffic will come to the Walmart store,” he told CNBC.
“As the economic challenges abate … service will become more important than convenience and price.
“And, we’ll see a shift back of some of the consumers. That’s the bubble.”
Simon revealed that higher-income earners have turned to chains such as Walmart when there are economic challenges.
He said some affluent shoppers stay, while others leave when the economic shocks subside.
Walmart chiefs gushed at how high-income earners have helped drive strong performance.
Shares recently hit an all-time high and the company’s e-commerce platform rocketed by 22%.
Shoppers made more visits to Walmart locations across the country.
Walmart reported more than $161 billion in sales over the quarter that ended in April.
Bosses are optimistic more affluent Americans will continue shopping with the family-favorite retailer.
“You think about things like AirPods, MacBook Air – these are items that certainly appeal to a high-income demographic,” John Rainey, the company’s chief financial officer, told The New York Times.
“The more that we move into that space and offer a broad assortment like that, I think the more we’re going to retain this cohort.”
Bosses are continuing to look for ways how to make the customer experience more convenient.
TOUGH DECISIONS
Doug McMillon, the current CEO of Walmart, said if the company offers goods at the right prices customers will respond, per an earnings call.
Last month, Walmart expanded its product range for low-income Americans through its new bettergoods label.
The price range is less than two dollars to under $15.
Walmart chiefs have stressed most items cost less than five dollars.
“Bettergoods is more than just a new private brand. It’s a commitment to our customers that they can enjoy unique culinary flavors at the incredible value Walmart delivers,” Scott Morris, the senior vice president, private brands, food, and consumables.
But bosses have decided to close some underperforming outlets across the country.
Walmart locations in San Diego County, Columbus, Ohio, and Towson, Maryland, have closed recently.
Chiefs also announced that more than 50 Walmart Health centers across the US will be shut down.
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